John Redwood’s resignation from the Tory Cabinet yesterday in order to challenge John Major for leadership of the Conservatives is the most exciting news out of London since Maggie Thatcher led the Tories to victory in 1979. Redwood, 44, the secretary of state for Wales, was a back bencher who served in Maggie’s economic policy unit during its supply-side heyday. He seems exactly the right man to emerge at exactly the right moment to revitalize the moribund Tories. Because of his desire to revive the Tory revolution by cutting taxes and spending, The Wall Street Journal’s London bureau says he is being compared by some observers to Newt Gingrich, and that Redwood doesn’t seem to mind the comparison. A quiet intellectual, son of a corporate executive, Redwood has put his focus on economics as opposed to conservative social policy. This strikes us as being more in parallel with Malcolm S. Forbes, Jr., who is also on the brink of seeking his party’s leadership via the GOP’s presidential primaries. Also like Forbes, Redwood has a keen interest in monetary reform.
In fact, the trigger for his challenge of Major is the debate over monetary union in Europe, with Redwood basing his campaign on a pledge to keep sterling out of such a union -- which would be dominated by the Bundesbank. It appears that the potential for a Redwood residency at 10 Downing had a nearly instantaneous impact among the Euro-currency enthusiasts. As Redwood was declaring his candidacy in London, Major was in Cannes attending the European Union summit, which buried plans for introduction of a common currency by 1997.
One of Redwood’s mentors appears to be John Moore who was Margaret Thatcher’s cabinet secretary charged with industrial privatization. Moore has since left the House of Commons for the House of Lords. A hard-money advocate of entrepreneurial capitalism, Lord Moore has also been opposed to the United Kingdom’s entry into a European System dominated by Brussels bureaucrats. If Redwood’s challenge is successful, there will be national elections before the year is out. The markets appear to think this challenge will divide the Tories, making it impossible for them to come back in popularity and retain power against Labor. But just 24 hours ago, it was difficult to imagine the possibility of a pro-growth opening in Europe. With John Major in London looking on, the continent seemed headed toward a more serious case of Eurosclerosis than it had even before Maggie’s arrival. Now, that outlook could change abruptly, and it’s no longer folly to imagine the possibility of a Washington-London gold linkup that would put Wall Street and the City of London at the center of a booming global capital market for a generation. Redwood’s challenge is another long-shot that could have enormous pay-offs if it succeeds, ushering in a second wave of classical economic approaches in Europe.